Blogging isn't dead. At least, Ben Bernanke, former chairman of the Federal Reserve, doesn't think so: He's now blogging at the Brookings Institution. In his first post, he says he wants to write about this fascinating chart, which shows the steady decline in interest rates over the past 30 years or so.
The question of why interest rates keep falling is an important one these days. Former Treasury Secretary Larry Summers has argued that declining real rates are a symptom of secular stagnation, meaning the global economy just isn't what it used to be, for some reason, and might never recover its old strength. Here's what Summers told Wonkblog about his theory, and here's a response from Western Kentucky University's David Beckworth, who disagrees with him.
What's in Wonkbook: 1) Reid will retire 2) Opinions, including Levin and Klein on the "doc fix" 3) Christie's ambitious wind-power project is politically inconvenient, and more
Map of the day: It's sugaring season in North America. Here are the U.S. states that produce the most maple syrup. Christopher Ingraham in The Washington Post.
1. Top story: Reid will not seek reelection
When Sen. Harry Reid (D-Nev.) retires at the end of this term, he'll have served 12 years as Democratic leader. "The Senate over which he presided was a contentious and divided one for extended periods of time. But his legacy will be defined just as much by his deft parliamentary maneuvers to push forward sweeping laws that might not have passed under different leadership. In President Obama’s first month in office, Reid helped pass an $800 billion economic stimulus plan, an expansion of a children’s health program and a pay-equity law for female workers. Then, through the rest of 2009 and the first half of 2010, Reid used painstaking patience to shepherd the landmark Affordable Care Act and the Dodd-Frank rewrite of Wall Street regulations into law. It was an often ugly process that earned him a lot of enemies." Paul Kane in The Washington Post.
Reid transformed the federal courts. "In December, 2013, Reid invoked what became known as the nuclear option. With Reid’s blessing, Senate Democrats changed the rules so that only a majority would be required to move lower-court judgeships to a vote. Freed from the threat of filibusters, Reid pushed through thirteen appeals-court judges in 2013 and 2014, a group of exceptional quality. They included Patricia Millett, Nina Pillard, and Robert Wilkins on the D.C. Circuit. For the first time in decades, that court now has a majority of Democratic appointees. ... Reid saw the importance of federal judges — which is especially apparent now, as the fate of the Affordable Care Act and the President’s immigration initiatives come before the courts." Jeffrey Toobin in The New Yorker.
And he advocated successfully for policies to help immigrants. "The intrinsic politics to Reid’s maneuvering on all issues, in the Latino community and far beyond, don’t undermine the senator’s legacy on immigration, Reid allies say. They credit Reid with changing the Democratic calculus on legal status and citizenship for the undocumented — turning immigration from a divisive wedge issue into a rallying cry for Democrats to coalesce around. ... There is also the unusual role Reid, a senator, played in the executive actions implemented by President Obama in 2012 and 2014. ... Those with knowledge of what was going on behind the scenes say Reid’s staff had worked up memos on how and why the administration should do DACA. The White House pushed back over whether they had legal authority to use prosecutorial discretion with a larger scope, and concerns that it was politically infeasible in the midst of a bitter campaign." Adrian Carrasquillo at BuzzFeed.
Sen. Chuck Schumer of New York will likely take Reid's job, although he's not the most senior Democrat. "Schumer will leapfrog Dick Durbin, the Senate minority whip, who announced his backing of the New Yorker Friday as well. Durbin will seek to remain the party’s whip, sources said Friday. ... The scramble confirmed what’s been known in the Capitol for years: Schumer has emerged as the clear front-runner to succeed Reid, even though Durbin is the second-ranking Democrat. After two cycles running the Democratic Senatorial Campaign Committee and after he’s taken the reins as the messaging guru, Schumer is viewed by many of his colleagues as being one of his party’s savviest political tacticians. Yet, Schumer and Durbin — who were Capitol Hill roommates for years — rarely discussed the touchy matter." Manu Raju and Burgess Everett at Politico.
Which Democrat will run to fill his seat in the Senate? "Democrats are abuzz about former Nevada Attorney General Catherine Cortez Masto, who Reid essentially endorsed Friday. She won both of her campaigns for attorney general—including one in 2010 that she rendered basically uncompetitive—by more than 15 percentage points... Masto's connection with Reid has led to controversy in the past. In 2008, her office indicted then-Lt. Gov. Brian Krolicki, a Republican who had started exploring a Senate run against Reid, on charges that a judge threw out a year later. But the indictment still derailed Krolicki's political plans, and he remains miffed that Masto never apologized. Reid went on to win reelection narrowly against a gaffe-prone opponent in 2010." Andrea Drusch in National Journal.
RALSTON: As far as his home state is concerned, Reid is the most important politician in a generation. "Power amassed without use, Reid has always thought, is power wasted. ... He didn’t just stand up for gaming against federal initiatives or save casino companies from bankruptcy, thus changing the look of the Strip. His advocacy for mining may have been stronger, even if conservative rural Nevada hates him and would never credit him. On mining’s behalf, Reid singlehandedly stopped an 1872 anachronistic law from being changed. He helped rural Nevada despite the enmity with millions in earmarks. The Great Basin National Park, a true wilderness jewel, would not exist if it hadn’t been for him." Politico.
MATTHEWS: Liberals would actually be weakened if Sen. Elizabeth Warren (D-Mass.) took Reid's position. "Making Warren majority leader... wouldn't move the party meaningfully to the left. Rather, it would move Warren to the right, and it would sacrifice the most effective outside voice pushing for the caucus to adopt a more economically populist agenda. ... You just can't be that antagonistic toward a president of your own party when you're a congressional party leader. You can disagree behind the scenes, and on rare occasions you can choose to pick a public fight, but you can't mobilize the kind of grassroots opposition that Warren routinely relies on." Vox.
2. Top opinions
YUVAL LEVIN: The House bill to end the "doc fix" is misguided. "It draws precisely the wrong lesson... concluding in essence that, because the Medicare bureaucracy could not manage a crude price-control mechanism without rewarding volume over quality in counterproductive ways, that same bureaucracy should now be assigned to define quality, measure it, and reward it. The bill text brims with confidence in the capacity of central planning and public-interested management... The core insight underlying the conservative approach to Medicare reform in recent years points in precisely the opposite direction from this proposed payment system." National Review.
EZRA KLEIN: No, it isn't, and relying on the market to price medical care will never work. "Americans pay vastly higher prices than residents of any other country, they know almost nothing about the prices they pay, and the cost of particular treatments vary wildly for no discernible reason depending on who's paying and where the service is being delivered. American health-care pricing is an insane mess... What's important to understand about Levin's post is that it really isn't an argument for fixing Medicare pricing. It's an argument for not fixing Medicare pricing — because the more problems Medicare has, the more politically vulnerable it will become. ... There is a deep tension in conservatism right now between those who want to use Republican control of Congress to heighten the contradictions in America's social programs, hoping the resulting mess will create opportunities for conservative reform, and those who want to try to improve those programs." Vox.
O'BRIEN: Inequality isn't just the price of progress. "It isn't like inequality has been rising the past 30 years because of heroic entrepreneurs. It's been rising because of bankers and CEOs—that is, the financialization of the economy. It isn't easy to tell a story about why Wall Streeters making dynastic amounts of money building, peddling, and then betting against exotic bonds is good for everyone else. Or why CEOs giving themselves pay packages that reward themselves whether or not they succeed is an essential feature of capitalism that, though it may grate in the short-term, is worth it in the longer one. This is the inequality that people intuitively understand isn't about creating value, but extracting rents." The Washington Post.
LUCE: American government lacks American ingenuity. "If you believe history is yet to come, the United States is still the place to be. Only in America can you find people trying to make cars fly, abolish human mortality and nurture robots with feelings. Yet America’s politics is remarkable for its resistance to new ideas. The gap between Washington’s dearth of creativity and the ferment beyond is widening. ... If you want a job in a future US administration, you risk running a gauntlet from which you may never recover. The route to success is paved with caution. One stray remark, or risqué policy idea, can kill your prospects." The Financial Times.
HUNT: Tea party lawmakers are preparing to take a stand on the debt ceiling. "The idea that the right has been subdued is a mirage. ... Conversations with conservative congressional Republicans suggest they believe the first quarter of this session has been a big disappointment, a failure to begin to keep campaign commitments. Looking ahead, they vow a tougher line, already eyeing a fight over the debt ceiling this autumn, when conservatives argue they'll have more leverage. ... This worries senior Republicans close to the speaker. One committee chairman, echoing a view held by others, says the right-wing Republicans really want to shut down the government sometime this year, as a matter principle, even if it costs the party politically." Bloomberg View.
NYHAN: A divisive primary won't damage Republicans, and a quiet one wouldn't help Hillary Rodham Clinton. "In reality, winning a nomination fight elevates the stature of the victor, who quickly brings partisans into the fold (especially during conventions), offsetting any damage to party loyalty or unity that the primary might seem to have incurred. By the time of the general election, the state of the economy plays a dominant role in determining who wins and loses, not whether one party’s candidates were mean to one another at a time when relatively few people were paying attention. Moreover, while the winning candidate may have to spend more money or campaign harder to win in a divisive primary, he or she can also benefit from the organizational efforts required to win a tough primary fight." The New York Times.
SPROSS: Housing prices show the harms of an unequal economy. "Here's a striking figure: from 2012 to 2014, housing prices rose 13 times faster than wages. ... One of the responses you often hear to concerns about inequality is that the purely relative gap between the bottom and the top doesn't matter. The only thing that counts is the material well-being of the bottom in an absolute sense. In other words, it doesn't matter that the 'haves' own an increasingly large share of, well, everything because the 'have-nots' can afford refrigerators and modern plumbing. But what we're seeing in housing is that, when you have a pool of relatively rich buyers, and a pool of relatively poorer buyers, with a big gap in between and relatively few to fill it, then prices will chase the rich buyers. That will drive the costs up for everyone. So the relative gap itself affects the absolute material well-being of the bottom." The Week.
A new critique of Thomas Piketty based on housing prices still supports his basic argument. "The growing share of national income deriving from capital income has not been distributed equally across all sectors. The return on non-housing wealth, in fact, has been remarkably stable since 1970 (see chart). Instead, surging house prices are almost entirely responsible for growing returns on capital. ... Mr Piketty used the historical evidence in his book to argue that a global tax of up to 2% a year on individual wealth should be introduced in order to prevent capital concentrating in the hands of the few. But if housing wealth is the biggest source of rising wealth then a more focused approach is called for. Policy-makers should deal with the planning regulations and NIMBYism that inhibit housebuilding and which allow homeowners to capture super-normal returns on their investments. ... But a story in which a privileged elite uses its political power (albeit through the planning system) to create economic rents for the few fits Mr Piketty's argument to a tee." The Economist.
Quote of the day: "The presidency of the United States is not some crown to be passed between two families. It is an awesome and sacred trust to be earned and exercised on behalf of the American people." -- Former Maryland Gov. Martin O'Malley. John Wagner in The Washington Post.
3. In case you missed it
What happened to New Jersey Gov. Chris Christie's plan for wind power? "Why the project stalled — and why New Jersey will almost certainly miss its goal of 1,100 megawatts of wind-generated electricity before 2021 — is the subject of intense debate here. Some blame the governor, whose enthusiasm for wind energy appeared to flag around the time he began exploring a run for the Republican presidential nomination. Political opponents say the turning point was a series of meetings in 2011 and 2012 with key Republican donors, including billionaire brothers Charles and David Koch, oil-industry magnates who have bankrolled campaigns against renewable energy." Joby Warrick in The Washington Post.
The merely rich are being ignored in the invisible primary. "It’s the lament of the rich who are not quite rich enough for 2016. Bundlers who used to carry platinum status have been downgraded, forced to temporarily watch the money race from the sidelines. They’ve been eclipsed by the uber-wealthy, who can dash off a seven-figure check to a super PAC without blinking. Who needs a bundler when you have a billionaire? Many fundraisers, once treated like royalty because of their extensive donor networks, are left pining for their lost prestige. Can they still have impact in a world where Jeb Bush asks big donors to please not give more than $1 million to his super PAC right now? Will they ever be in the inner circle again?" Matea Gold and Tom Hamburger in The Washington Post.
In New Orleans, public schools responded to competition with more aggressive marketing, according to a new study. "The school-choice movement is built on the philosophy that competition forces schools to improve. ... Of the 30 schools examined in the study, leaders at just 10 — or one-third of the total — said they competed for students by trying to improve their academic programs or operations. Leaders at far more schools — 25 — said they competed by marketing their existing programs, including with signs, billboards, t-shirts, home visits and incentives for parents to refer potential students." Emma Brown in The Washington Post.